US Open – ECB’s easy meeting, Markets got China data wrong, USD rebounds, Oil softens, Gold steady, Earnings continue

European stocks and US futures are lower following soft Chinese consumption data and surging global coronavirus cases.  Financial markets were expecting solid Chinese economic data across the board and used the disappointing retail sales figure as the excuse to sell.  China’s second quarter GDP came in better than expected at 3.2%, while retail sales in June disappointed with a 1.8% decline, the consensus estimate was for a 0.5% gain. China’s economy is back into growth territory following steady stimulus and relatively strong success in battling COVID-19.  The rebound in China however is mostly on the industrial side and not the consumer.  The Chinese retail data however is not as bad it seems, as automobiles, catering, jewelry, and petroleum goods were the main categories that posted declines.  The decline in cars, which is about 10% of the retail sales value was mainly attributed to the strong base it had a year ago.  Petroleum consumption should also not have been a surprise considering the record flooding in Southern China. 

ECB/Brussels Summit

The ECB policy decision will likely see no major surprises and keep the pressure on EU leaders to show unity and finally deliver on the post-pandemic 750 billion-euro recovery fund.  ECB policymakers do not have a meeting in August, so they will take the next couple of months to see what is the shape of the recovery and how the fiscal response unfolds. 

Europe seems they are heading towards debt mutualization and that is a possible game changer for the euro.  The idea that hard-pressed states will get much needed help from their neighbors seemed like an impossibility before the coronavirus pandemic. 


The dollar is mustering up a rally ahead of the ECB policy decision and Friday’s EU council meeting.  The ECB is widely expected to keep everything on hold and await more economic data and to see the EU’s fiscal response. 


Crude prices are softer as global coronavirus cases continue to surge and after China’s economic recovery shows signs it could be stalling.  The crude demand outlook is not getting a strong boost from China.  Domestically, the torrential rains in Southern China prevented many infrastructure projects and the consumer is not yet returning to pre-pandemic behavior.  China will need help from their trading partners and right now most of them are still battling the COVID-19 situation. 

Oil prices did not see a massive taper tantrum reaction to the OPEC+ decision to scale back their production cuts from August.  The Saudi’s and Russian’s are optimistic the extra supply will not kill oil’s historic rebound, but that ultimately will depend if the demand outlook improves. 


Gold prices remains trap in a range as virus uncertainty is countered by vaccine progress and as central banks adopt a wait-and-see approach for the rest of the summer.  While central bank policymakers will have an easy rest of summer, government leaders from the US and Europe will need to deliver their own fiscal responses.  Gold’s best friend has been stimulus and there will be no shortage of that anytime soon. 

Gold is likely to continue to see record ETF inflows as coronavirus worries continue to worsen.  Gold should continue to rise as business activity lost most of its reopening momentum and many investors anticipate more stimulus will be thrown to try to avoid permanent labor damage to the economy. 


Bank of America shares dropped following beats with both the top and bottom line as concerns remain elevated for their consumer business.  The bank posted a strong trading revenue beat, supported by a 50% rise in FICC trading. 

Johnson and Johnson shares rose after strong results and improved guidance.  J&J is in the coronavirus vaccine race and did not announce any additional data.   

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya